The COVID-19 pandemic transformed cloud computing from a useful technology niche into a basic one, and cloud computing ETFs have reaped the benefits. He WisdomTree Cloud Computing Fund (WCLD) has risen 89% in the last twelve months, beating the rest of the cloud computing ETFs and easily surpassing the Dow Jones industrial average, which gained just 7.2% over the same period.
“The pre-pandemic of the cloud was like a Tesla: it was new and hot,” Jake Dollarhide, CEO of Longbow, said in an interview with CNBC. “Coming out of the pandemic, it’s like model T. It’s become so ubiquitous.”
Cloud software is installed over online networks and does not require physical infrastructure to function. This made companies easier to implement as they pivoted to remote work protocols.
As the world begins to open up and work from home becomes less necessary, there are questions about whether cloud computing will continue to thrive. With the end of COVID restrictions in sight, WCLD has fallen 3.2% to date.
Last week was particularly tough for tech stocks, as profit reserves and overvaluations hurt the sector.
Long-term optimism for the cloud
Despite the recent setbacks, cloud computing has numerous long-term growth prospects. Once implemented, cloud software is embedded in a company’s workflow, providing it with higher retention and longer revenue periods. Even if some offices start to open, remote work will continue to be a reality for many in the future.
There are also complications and threats to reopening. Cases of COVID continue to rise, and when the Johnson & Johnson vaccine was withdrawn due to a rare but severe blood clot problem, investors who had become stocks that benefited from a return to work went begin to rethink the usefulness of a sector such as cloud computing.
While there is some apprehension about valuations of technology stocks, there are many reasons to predict that cloud computing will go well in the long run.
Wedbush technology analyst Dave Ives said in an interview with Yahoo! Finance: “Today we estimate that 35% of workloads are in the cloud, with twice the number of workloads in the cloud planned for 2023 across the business landscape in an impressive trajectory. While valuations will continue to be an emotional debate of oxen and bones, the fundamental growth on the horizon of these next-generation technologies is unprecedented as this fourth industrial revolution begins to gain strength.
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